EarthLink (NASDAQ: ELNK) seems to be saying there’s life after managed IT services. As you’ll recall, the network services provider sold off certain MSP assets to Synoptek for $29 million back in February. Fast forward to present day and EarthLink seems to have shifted away from traditional SMB IT services and is now focusing on vertical market consulting opportunities, particularly in the retail sector.
So how is EarthLink’s business performing since selling off some of those IT assets? In some ways it’s too soon to say. The company’s Q2 profits beat expectations, but revenues dipped 15 percent and fell short of Wall Street’s expectations, according to quarterly results that the company announced today.
Still, help is on the way — in the form of Boston Retail Partners (BRP), a 40-person consulting shop that EarthLink acquired in July. According to EarthLink:
“BRP provides technology strategy and consulting across the full breadth of retail solutions, including point of sale, e-commerce, customer relationship management, mobile, payment security, enterprise resource planning, order management and supply chain. Together, EarthLink and BRP will extend EarthLink’s capabilities in the retail sector to provide clients with deep expertise and end-to-end technology solutions that address the entire retail organization and improve customer engagement and loyalty. The transaction is part of EarthLink’s ongoing strategy to provide deep vertical expertise to its clients and to strategically expand its consulting portfolio with end-to-end solutions to best serve client needs.”
BRP sounds like a promising acquisition. And at 40 people, it should be a manageable “tuck in” rather than a complex merger.
In some ways, BRP is bucking the managed- and cloud-services recurring revenue trends. Check the company’s website and BRP promotes IT strategy, vendor selection and project implementation services — though I suspect some of those advisory services generate recurring revenues.
Overall, EarthLink positions itself as a network services provider that promotes cloud and hybrid networking, security and compliance, and unified communications to customers. The company has 29,000+ fiber route miles, with 90 metro fiber rings and secure data centers that provide ubiquitous data and voice IP coverage, EarthLink says.
EarthLink CEO Joseph Eazor and CFO Louis Alterman are expected to more fully explain the company’s most recent quarterly performance during an earnings call Tuesday morning. We’ll listen in and potentially update this article with any key takeaways.